Bahrain launched its Covid-19 Economic Recovery Plan (ERP) in October 2021 to address the economic stresses that arose during the Covid-19 pandemic, and to keep the kingdom on track to achieve the goals of Bahrain Economic Vision 2030. Workforce strengthening and job creation is one of the ERP’s five central pillars, with the government intent on cultivating a local talent pool equipped to compete in the global information economy. The other key elements of the ERP are developing priority sectors; facilitating and raising the efficiency of commercial procedures; implementing and executing major development projects; and increasing fiscal and economic stability and sustainability. Regarding the latter, the government has been working towards achieving its Fiscal Balance Programme, with efforts ongoing as of the end of December 2024.
Workforce
Through the National Labour Market Plan 2023-26, the government aims to create quality employment opportunities for citizens, and align the outputs of national training and education systems with the needs of the labour market. The Labour Fund (Tamkeen) is working with various government and private sector entities to enhance workforce capacities. In 2023 Tamkeen directly facilitated the creation of more than 12,300 jobs for Bahrainis, while also providing more than 10,700 training opportunities and support for 5100 businesses. Notably, 59% of employment opportunities created in 2023 were filled by women, while 44% of Tamkeen’s employment support initiatives were directed towards small and medium-sized enterprises (SMEs).
While boosting employment for Bahrainis and improving the future-readiness of the local talent pool is receiving significant focus, so too is attracting international talent. In February 2022 the government launched its Golden Residency Visa scheme to attract talented foreigners, while those who already reside in Bahrain and meet the residency, property ownership and salary requirements are able to convert their existing status to receive the visa (see Construction & Real Estate chapter). In addition, in June 2023 the Bahraini government began to offer a platinum residence permit, one of the key benefits of which is permission to purchase real estate without being restricted to designated areas within the country. Corresponding surges in real estate transactions have been recorded since the launch of the new visas.
Business Procedures
The new visa and residency permits were part of the ERP’s goal of enhancing business procedures. Bahrain has launched various digital platforms and portals that are designed to ease bureaucratic bottlenecks and streamline business procedures. In April 2022 the government launched the Government Land Investment Platform, which allows investors to view and submit bids for parcels of land. Another key development has been the upgrades made to the Sijilat platform, providing a digital window through which business licensing, registration and amendment procedures are processed. In 2023 Bahrain attracted $6.8bn of foreign direct investment – nearly 250% higher than the $2.8bn reported in 2022, according to UN Trade and Development’s World Investment Report 2024.
Development Projects
The construction sector stands to benefit from the ERP. Infrastructure expansion is key to the success of Bahrain’s development agenda, with major projects in the pipeline primed to drive construction activity over the medium and long term. The multiplier effects such projects would bring are crucial to the government’s strategic planning, and the authorities are implementing initiatives designed to attract higher inflows of private and international investment in order to reap those benefits.
In April 2023 the government launched its Golden Licence to attract investment into large-scale development projects. Companies implementing projects capable of creating more than 500 jobs, or with a value exceeding $50m, can qualify for priority land allocation, as well as government services, utilities and business-procedure-related incentives offered by Tamkeen and Bahrain Development Bank. By March 2024 the Golden Licence had already attracted $2.4bn in funding for nine projects that are expected to generate 3000 job opportunities. The development of the $200m Bahrain Titanium plant by Swiss firm Interlink Metals and Chemicals, and the greenfield construction of the 300-metre-tall National Bank of Kuwait headquarters were among the most notable projects.
Multi-Sector Growth
Alongside the ERP, Bahrain has launched medium-term strategies covering various sectors, as the government is working to increase national production and broad-based capabilities through a number of industrial expansion projects and the modernisation of business procedures. An early ERP milestone set by the kingdom’s government was for the country’s non-oil economy to expand by 5% in 2022 – a target that was surpassed, with 6.6% growth registered for the year. Projected non-oil growth of 3.4% in 2023 is still higher than the 2019 rate of 1.7%. This is despite the global backdrop of high inflation, and geopolitical and economic uncertainty.
A contributor to Bahrain’s slowdown in non-oil growth was a decline in manufacturing, with sector GDP dropping from 4.3% in 2022 to an estimated -0.4% in 2023. The 2023 slump was experienced globally due to China’s slower-than-anticipated recovery from the pandemic, and interest-rate hikes in the EU and the US. Bahrain mirrored the international approach to lending, which likely constricted production and margins for the country’s smaller manufacturers. An extended period of high interest could have lasting ramifications for Bahrain’s business community, with the country’s SMEs accounting for nearly 30% of GDP.
In contrast, the financial services sector expanded from 2.7% in 2022 to an estimated 5.7% in 2023, demonstrating that not only has the sector developed a resilience to external stress and shocks, but also that it is precisely at such times that international businesses can place their trust in Bahrain’s well-regulated banking and financial services institutions.
Other Sectors
Additional non-oil sectors targeted for expansion under the ERP were forecast to have slowed in 2023, with transport and communications activities registering the most pronounced contraction, from 12.2% in 2022 to 3.1% in 2023. This can be attributed to elevated growth in 2022 resulting from the low base of 2020 and 2021. The transport sector is central to the development of the kingdom’s tourism industry, as are real estate and business activities, and hotels and restaurants. The latter two categories experienced a slowdown in growth in 2023, with real estate and business activities projected to have dipped from 5.7% to 4.1%, and hotels and restaurants from 13.9% to 8% between 2022 and 2023. Nevertheless, tourist arrivals surged by roughly 25% in 2023, reaching 12.4m. Only the hydrocarbons and manufacturing sectors registered negative growth.
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